Trading Statement

1 October 2013

Findel plc (the "Group")

Post-close Trading Statement

Findel plc, the UK Home Shopping and Education business, today releases a trading update having entered the closed period ahead of its interim results announcement for the 26 weeks ended 27 September 2013. The interim results announcement is scheduled for 27 November 2013.

Group Performance

The Group has made excellent progress in the first half of the year, building on the momentum achieved earlier in the year reported in its Interim Management Statement on 24 July 2013. Group sales during the first half were 5.2% ahead of the prior year (6.2% excluding our Far Eastern sourcing operation) leading to an increase in first-half operating profit.

The largest business in our Group, Express Gifts, has maintained a strong sales performance, with sales 10.8% ahead of the prior year. Our investment in value and product range continues to yield increased total cash returns and contributed to an increase in customer numbers, which positions the business well as we move into the peak Christmas period. Bad debt indicators continue to remain stable. Our Far East sourcing operation has recently changed the management team of its Indian office and will be opening an office in Shanghai in the coming weeks to supply a broader range of goods to Express Gifts and other group companies.

Within Kleeneze, our efforts to arrest decline continue, although comparators to prior year have worsened slightly since our statement of 24 July 2013, with sales for the period down 3.4% versus prior year. However, this recent deterioration is largely accounted for by a change in catalogue timing, with a later launch of the Christmas catalogues this year.

In the absence of the benefit of the European Football Championships and the Olympics, together with the poorer comparative on-pitch performance from some key partners, Kitbag sales were 6.9% below the prior year. As a result, first-half losses have increased versus last year, with an element of clearance also affecting margins. However, the business continues to make progress on its turnaround and has implemented a number of initiatives in the first half - particularly to improve international sales, which have risen by a substantial amount over the period - that are expected to yield a benefit in the second half. The business continues to demonstrate its leading position as a partner for sporting organisations with the recent launch of online retail operations for Borussia Dortmund (outside Germany).

Our Education Supplies business is now well on the road to recovery and has achieved a much improved first half performance. Sales were 8.2% ahead of prior year, with an associated improvement in margin and profitability. Our UK brands achieved strong sales growth across the board, totalling 4.5%, together with a very strong recovery in our International business with sales 21% ahead of prior year. As expected, activity levels and sales from our support of the Sainsbury's 'Active Kids' programme have returned to normal levels after last year's limited duration which reflected Sainsbury's involvement as a Paralympics sponsor. Recent trading conditions suggest that schools are changing their buying patterns and that the timing of LEA budget releases to academies has varied, but the business is well placed to continue its progress in the second half.

Financial Position

The improvement in the Group's performance over the last year has been an important factor in improving trading terms with suppliers. The impact of that upon cashflow, a tight control over inventory levels, and the net proceeds from the sale of the Healthcare division earlier in the year has been to more than offset the increase in credit receivables resulting from the strong sales growth at Express Gifts. Total bank debt for the group is therefore expected to be in the region of £237m, £15m lower than September 2012 with core bank debt £20m lower.

Outlook

We are very encouraged by the progress that we have made and the clear evidence of the success of our turnaround. In particular, Express Gifts has yet again delivered a strong performance and the Education Supplies division's strengthening continues. We are therefore well positioned ahead of our important peak trading period. Looking ahead, we see further potential in all Group companies, and our strong performance in the first half of this year leads us to reiterate our ambition to enter a 7-9% range for Group operating margin in the financial year commencing April 2014.

Enquiries

Findel plc Roger Siddle / Tim Kowalski0161 303 3465

Tulchan Communications LLPStephen Malthouse / Susanna Voyle / Michelle Clarke020 7353 4200